Food and beverage adds weight to hotel revenues - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Food and beverage adds weight to hotel revenues

May 19, 2000

Traditionally room income has dominated the revenues of five star hotels. However over the past few years due to decline in occupancies and average room rates this has changed as hotels have been faced with decline in room income. Hence to beef up their income levels they have been consistently trying to increase income from food and beverage activities. Besides increasing revenues from airline catering now the larger hotel companies have been trying to increase the revenues from institutional catering, sprucing and opening of specialty restaurants, incentive schemes like discounts on their food and beverage outlets. As a result of the above food and beverage income has started assuming an important place in the revenue models of hotel companies.

From the early 90's to the mid 90's, for the large hotel chains food and beverage income accounted for around 20% -25% of total operating income, however since the past 3-4 years this has changed and food and beverage income now accounts for close to 35%-40% of the operating income of hotel companies.

However this ratio is again expected to change over the next two to three years as occupancy rates and average room rates will see good growth due to the benefits of an improved economic scenario and rise in foreign direct investment. Also in a good year for hotels, margins are higher from income from rooms rather than from food and beverage as this segment has higher variable costs.

On valuation terms, Indian Hotels Company Ltd is trading at a price to earnings multiple of 8.4x and EIH Ltd is trading at 6.4x (both on FY99 earnings). This is low as compared to multiples of 20x-25x they traded at few years ago and negativity's facing the hotel industry all seem to be in the price.

Equitymaster requests your view! Post a comment on "Food and beverage adds weight to hotel revenues". Click here!

  

More Views on News

TAJ GVK 2020-21 Annual Report Analysis (Annual Result Update)

Nov 19, 2021 | Updated on Nov 19, 2021

Here's an analysis of the annual report of TAJ GVK for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of TAJ GVK. Also includes updates on the valuation of TAJ GVK.

EIH ASSO.HOTELS 2020-21 Annual Report Analysis (Annual Result Update)

Oct 29, 2021 | Updated on Oct 29, 2021

Here's an analysis of the annual report of EIH ASSO.HOTELS for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of EIH ASSO.HOTELS. Also includes updates on the valuation of EIH ASSO.HOTELS.

MAHINDRA HOLIDAYS Announces Quarterly Results (2QFY22); Net Profit Up 107.9% (Quarterly Result Update)

Oct 26, 2021 | Updated on Oct 26, 2021

For the quarter ended September 2021, MAHINDRA HOLIDAYS has posted a net profit of Rs 598 m (up 107.9% YoY). Sales on the other hand came in at Rs 5 bn (up 13.5% YoY). Read on for a complete analysis of MAHINDRA HOLIDAYS's quarterly results.

Revenge Travel is Here. 9 Stocks Likely to Benefit (Views On News)

Sep 4, 2021

The term 'revenge travel' refers to the desire of going on a vacation after an extended period of lockdown.

Why Did Shares of Jubilant FoodWorks Rally Today? (Views On News)

Jun 16, 2021

The company sees a 90% recovery despite minimal dine-ins.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.

7 Stocks that Mutual Funds Can't get Enough of (Views On News)

Dec 1, 2021

Come hell or high water, these are the top Indian stocks which mutual funds never leave.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

COMPARE COMPANY

MARKET STATS